New Hope, Soul Patts and Brickworks

Question

i read with interest Gaurav's article "Coal: A dark future ahead?" and noted the Avoid recomendation on New Hope Corporation. Since New Hope is Soul Patts largest investment would you be able to comment on or update your recommendation on SOL ? thanks

Answer

Good question Martin, and one quickly echoed by a few other members on the Q&A. Please note that I've downgraded Soul Pattinson to Hold today (see review here), mainly because over the past year its key investment (New Hope) has gone down substantially in price while its own share price has actually gone up - thereby eroding the margin of safety for new buyers. But I don't feel any tendency towards panicking and selling Soul Patts, partly due to New Hope's enormous net cash balance - it's really half coal miner, half bank account.

I'll also review Brickworks tomorrow but the effect will be less pronounced on BKW.

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